Following the announcement of the revamped tax structure by the GST Council during its 56th meeting on 4th September 2025, Sundararaman, Chairman of the Southern India Mills Association (SIMA), expressed deep appreciation and gratitude to Prime Minister Narendra Modi.
He also extended his thanks to Union Finance Minister Nirmala Sitharaman, Union Commerce & Industry Minister Piyush Goyal, and Union Textiles Minister Giriraj Singh for implementing a bold and historic tax reform.
The decision to bring the entire man-made fibre (MMF) textile value chain under the 5% GST slab—a long-pending demand of the industry—was especially welcomed, as it effectively addresses structural issues related to MMF raw materials.
Sundararaman noted that the government has set a vision to increase the size of the textile industry from USD 172 billion to USD 350 billion, and exports from USD 37 billion to USD 100 billion. He observed that textile exports have stagnated at USD 37 billion for over 12 years, largely due to issues like declining cotton production, which has hindered industry growth.
He pointed out that to achieve this vision, India would need approximately 22 billion kilograms of raw material (fibres and filament yarns), compared to the current availability of around 12 billion kilograms. In this context, polyester will serve as the key growth driver for the textile industry.
The SIMA Chairman acknowledged that although raw materials such as PTA and MEG (used for polyester), and wood pulp (used for viscose), still attract an 18% GST, the revised law enabling 90% provisional refund within 7 days is a significant step forward. This mechanism—unavailable under the previous inverted duty refund system—will help address tax inversion issues faced by MMF producers.
He added that since the number of MMF manufacturers is relatively small, the government can easily resolve their tax-related challenges, which would in turn benefit lakhs of manufacturers, traders, and ultimately, consumers.
Sundararaman also commended the government for establishing fibre neutrality, closing loopholes for duty evasion, and ensuring 100% compliance by bringing the entire textile industry under the 5% GST rate—also accommodating compounding taxpayers who pay a 1% tax rate.
He further stated that this bold and timely initiative by the Prime Minister provides a major boost to the Indian textile industry in facing challenges posed by abnormal US tariffs on Indian goods. According to him, domestic consumption could increase by 7–10% in a short time, improving per capita consumption and government revenue, as the final products continue to attract only 5% GST. This, he concluded, would empower the industry to navigate global challenges more effectively.
